Cable & Wireless avoids Footsie ejection

Telecoms firm Cable & Wireless tonight looked set to have survived demotion from the FTSE 100 Index despite its value plunging by £500m this year.

Despite the rapid rise in the valuations of mining firms Lonmin and Vedanta Resources, it is likely that there will be no changes in the Footsie for the first time in a decade when membership comes under review.

Steel giant Corus was already guaranteed a return to the elite after an absence of nine months, replacing shipping icon P&O following its £3.9 billion takeover by Dubai’s DP World.

But many analysts believed it would be joined in the top flight by Lonmin and Vedanta on the back of rocketing metal prices while C&W was set to lose its status along with media firm Daily Mail & General Trust.

The FTSE 100 Index’s Europe committee decides promotions and demotions from the top flight at its quarterly review meeting.

Based on tonight’s closing prices, Lonmin was the UK’s 93rd largest quoted company – two places ahead of Vedanta but just shy of the benchmark that would have secured its promotion to the elite.

Shares in both firms fell by more than 4% today, which could have scuppered their chances.

C&W tumbled down the rankings to 109th place to be within a whisker of automatic ejection from the Footsie, while Daily Mail & General Trust was in 104th spot and only a rung ahead of troubled pest control firm Rentokil Initial.

The slump in the valuation of C&W to around £2.5bn followed its shock announcement at the end of January that there would be no growth in its ailing UK business until 2008 at the earliest.

The company is now restructuring and has warned that its current headcount of 5,500 should fall to between 2,500 and 3,500 over the next four to five years.

The changes reflected plans to concentrate on fewer and larger corporate customers, while reducing the complexity in its products and systems.

C&W spent three months outside the top flight in 2003 but has been present ever since.

A statement from the Footsie today confirmed that Corus – formed out of the merger of British Steel and Dutch rival Hoogoevens in 1999 – would rejoin the leading 100 firms at the close of trading on Wednesday.

Its promotion was secured when a court bid by a US firm to block the takeover of P&O failed.